It is expected that the consumer credit conditions and US businesses from deteriorating over the next six months to their worst since the pandemic, according to a survey of chief economists at 15 of the country’s top banks.
The American Bankers Association (ABA) reported Thursday that its credit condition index fell to 5.8 in the second quarter, from 12.5 in the first. A reading below 50 on the gauge, which is derived from survey responses, indicates that economists anticipate weaker credit conditions in the next six months.
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Los economists “expect banks to tighten their credit standards this year in reaction to still elevated inflation and higher interest rates, which will lead to weaker growth in consumer spending and business investment,” the ABA said in a press release.
Credit conditions are coming under increased scrutiny following the failure of Silicon Valley Bank. The recent turmoil in the banking sector is also affecting the Federal Reserve’s efforts to curb inflation, which it is trying to control without triggering a recession.
The survey was carried out following “recent tensions in the banking sector,” the ABA added. It asks economists a series of questions, including whether they expect the quality and availability of credit to consumers and businesses to improve, stay the same, or worsen.
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Los 15 economists foresee a lower availability of credit for companies in the next six months, while almost all anticipate the same for consumers, according to the association.
“The latest ABA Credit Conditions Index acknowledges that recent good credit quality will be threatened this year by increased uncertainty and headwinds from the broader economy,” Sayee Srinivasan, ABA chief economist, said in a statement. the press release. “Lenders are responding with cautious and prudent underwriting.”
He ABA Economic Advisory Committeefrom which the survey was drawn, andIt is made up of economists from major banks, including JPMorgan Chase & Co., Bank of America Corp and Morgan Stanley.
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